The Effect of Economic Uncertainty on the Housing Market Cycle

Goodness C. Aye, Matthew Clance and Rangan Gupta

Journal of Real Estate Portfolio Management, 2019, vol. 25, issue 1, 67-75

Abstract: Executive Summary. We examine the spillover effect of economic uncertainty on the duration probability of housing market booms, busts, and normal times in 12 OECD countries. Quarterly data from 1985 to 2012 were used. Based on a discrete-time duration (hazard) model, we find that the probability of exiting housing market busts increases with higher economic uncertainty in a statistically significant fashion. Uncertainty, however, is not found to influence the likelihood of leaving booms and normal times. Our results suggest that housing serves as a possible hedge against uncertainty.

Date: 2019
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Working Paper: The Effect of Economic Uncertainty on the Housing Market Cycle (2017)
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DOI: 10.1080/10835547.2019.12090024

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